The Hidden Costs of Buying a Used Car
Some used vehicles have gotten to be more expensive than their new counterpart. This is hard to believe, but let me show you why.
Everyone assumes that new cars depreciate quickly after being purchased. You constantly hear about cars losing 15% to 30% of their value as soon as they're driven off the lots.
While this is true for many vehicles, that's not the case for some.
When the economy isn't doing so well and new car sales are suffering, used car sales tend to go up - pushing their prices higher.
Sometimes, used car prices are pushed up so quickly, that slightly used versions (typically only 1 year old), can sometimes end up being more expensive than their newer counterpart.
The reason is due to a mixture of incentives and rebates offered on the new vehicles, higher financing costs on the used one, and generally clueless buyers who drive up the prices of used without doing enough research.
Many people don't realize that the interest rate for financing a used car is typically about 1% higher than it is for a new car.
You need to take these factors into account before blindly assuming that a used car will always be less expensive than a new one.
If you're considering a slightly used car that is only 1 or 2 years old, you need to carefully research prices on a new one as well as financing rates to make sure you get an adequate discount.
To maximize savings while minimizing repair and maintenance expenses, you should consider buying used cars that are between 3 and 5 years old.
3 Steps Every Car Buyer Needs to Take to Save Maximum MoneyThe key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:
Step 1 Get Prices From My Trusted NetworkSelect the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).
Step 2 Get Prices From TrueCar / CarsDirectTrueCar, and CarsDirect are my top 2 online price quote recommendations. These services show you pre-negotiated prices from dealers closest to you - and the deals are usually pretty decent. But remember, you can still negotiate further.
Step 3 Complete my ChecklistFollow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid